What kinds of contracts are there with a label?

A label wants to work with you. But with which contract? There are three classic models. The difference is always the same: who pays, who carries the risk, and who owns the recording in the end?

1. The exclusive artist deal

The label pays for everything: studio, production, video, marketing, plus your advance. In return it owns the recording, and you record only for this label, often for several albums. Your share: usually 15 to 25 percent. The label carries the full risk.

2. The licence deal (German: Bandübernahmevertrag)

You produce the song yourself and pay for the recording. The label takes the finished master and handles distribution and marketing. Because you paid for production, your share is higher, roughly 20 to 30 percent. And the rights are easier to limit in time.

3. The distribution deal

Here you are your own label. Recording, video, marketing: all your job and your money. The distributor only gets your song onto Spotify, Apple Music and the rest. In return you keep your master and usually 70 to 90 percent of the income.

An example

With 250,000 euros of income, your share is 50,000 euros in the artist deal, around 62,500 in the licence deal and 200,000 in the distribution deal. But there you paid for everything up front.

No model is better. It depends on how much money and risk you can carry yourself.

All figures are rough guidelines for beginners and focus on Germany. They are no substitute for legal or tax advice.